BBC gets answers from Music Industry figures about digital music

The BBC has questioned some of the Music Industry's biggest players using the most frequent queries from users of the BBC News website. The questions were answered by John Kennedy, chairman of the International Federation of the Phonographic Industry (IFPI), Peter Jamieson, executive chairman of the British Phonographic Industry (BPI), Steve Knott, managing director of HMV UK & Ireland and Brad Duea, president of Napster.

The BBC summarized the 8 most common questions as follows...

Will download prices come down?

Should iPod users be punished?

Why buy on the net?

Downloads aren't flexible

What's the point of DRM?

Will downloads last?

How can teenagers be persuaded?

Have you ever stolen music?

I'll add in the real questions from consumers that the BBC put to them, an answer and a link to the rest of the answers. I have chosen questions 1, 2, 5 and 8 to provide you with a sample.

Question 1:Will the price of tracks or albums be reduced with the more cost-effective digital distribution method? You don't have to manufacture the CD, package it, send it to the distributor/wholesaler, and finally the shops.
Rowan Smith, Exmouth

Answer 1, Brad Duea: First, you are correct that with digital distribution the labels have eliminated some of their previous costs associated with physical distribution. However, the labels have incurred some new costs. For example, the costs of encoding the tracks in the various bit rates in which they distribute the songs. Less obvious, however, are the costs the labels have incurred with regard to clearing the online rights for various artists and albums.

Second, in addition to the actual costs associated with the content, Napster also incurs bandwidth costs, storage and other hardware costs, customer service costs, marketing costs and other related costs.

Question 2: Do you believe people who are buying CDs legally and copying that music to an iPod should be punished - as they are, in fact, breaking the law?
Darren, Cardiff

Answer 2, Peter Jamieson:Consumers don't have the right to copy CDs in the UK and never have, and though we've never brought action against anyone for private copying, the advent of peer-to-peer and digital distribution has turned the issue on its head.

The real problem starts when people decide to upload their ripped CD collection to the internet for millions of others to take for free. There is nothing private about sharing your music collection with millions of others which is why we focus our anti-piracy efforts on the worst offenders.

Question 5: Given that every single Digital Rights Management (DRM)-protected song on the music download networks is still very easily found on any file-sharing network, what has DRM achieved other than alienating legitimate, legal, paying customers?
Andrew Livingston, London

Answer 5: John Kennedy:Without DRM, the explosion in the availability of music via digital channels would not have been possible. The purpose of DRM is not to alienate music fans, it is actually to improve your access to music.

There are now at least 10 ways in which you can legally enjoy music - the list includes: ringtone, master ringtone, phone download, phone stream, a-la-carte download, disc, subscription, online stream, UMD music for PlayStation, kiosk and video.

Question 8: The music industry is throwing itself wholeheartedly into the prosecution of people it perceives as "stealing" music. Can of the panel place their hands on their hearts and insist, honestly, that they never taped a song off the radio, or from a mate, in their youths?
Simon Hayes Budgen, Milton Keynes, UK

Answer 8: Steve Knott: I'm sure many, if not all, of us have taped a song from the radio or burnt a CD. But that's fine - and it's not an issue when people make small numbers of copies for their own use. It's those people who abuse the process by engaging in serial downloading and particularly 'uploading', where they are giving away thousands of tracks that are not theirs to give, that are effectively cheating on everybody else, including other music fans, who possibly have to pay more for their legally acquired music as a result.

Those are the questions I thought would most interest the majority of AfterDawn users. Check out the full questionnaire when you have time, it is quite interesting. I personally thought it was funny to see how many times Brad Duea used it as an opportunity to have a go at Apple's iTunes and iPod.

<blockquote>"...the labels have incurred some new costs. For example, the costs of encoding the tracks in the various bit rates in which they distribute the songs..."</blockquote>
Yes, we all know how expensive it is to put a CD in a computer and click 'Encode'... way more expensive than, say, manufacturing tens of thousands of plastic discs, each with its own case and full color artwork, and then packaging and shipping them to thousands of different locations.
<blockquote>"...less obvious, however, are the costs the labels have incurred with regard to clearing the online rights for various artists and albums...."</blockquote>
The same exact thing happened with radio, television, etc... the music industry seems doomed to repeat its own mistakes. In fact, in the early 1900's the recording industry fought tooth and nail to quash innovation on the radio (you can hear their failure to do so on your AM/FM dial), and the same is now happening with the Internet. Since the labels have consistently failed to adapt to a fair digital music licensing scheme and continue to introduce competing DRMs, they have dug their own grave. Why should music fans absorb the cost of their incompetence?
<blockquote>"Second, in addition to the actual costs associated with the content, Napster also incurs bandwidth costs, storage and other hardware costs, customer service costs, marketing costs and other related costs."</blockquote>
Which is more expensive... building a massive CD manufacturing plant and physical distribution network (and paying hundreds of employees to run it) or buying a server farm and hiring an IT team? And did he actually say storage was an additional cost? Napster's entire digital library fits on a few hundred iPods. It's a little more expensive to build warehouse space to store millions of plastic discs, especially when labels paid to manufacture all those discs, yet only small percentage will ever be sold. Bandwidth costs (and extra customer service) are the only truly NEW expenses for the industry.

You can't blame the labels for fighting so hard to protect their music online because they've clearly lost the battle of simply friends getting music from friends. They realize it's quite easy to get music for free or very cheap without the internet and can do little to nothing about it, so containing internet distribution is the only front they have a chance of controlling (even though they're fighting a losing battle)

Here are some of my thoughts on the questions answered in that article.
From Question 1:
Peter Jamieson, executive chairman of the British Phonographic Industry (BPI): (excerpt)

Quote:There are also new digital costs such as aggregators, the creation, storage and delivery of metadata, payments to credit card companies and additional online marketing and website costs. That said, at around 85p, downloads are still considerably cheaper than CD singles and fantastic value for money.

What? The last thing I want to hear of is more implementation of metadata files. That's what in part what the whole WMF security threat was about. He should have used a different word than that, and all this credit card stuff doesn't assure me much either.
From question 4:
John Kennedy, IFPI: (excerpt)

Quote:But we don't make the technology, we create the music. It's the technology companies that hold the key to achieving this. They need to make proprietary systems interoperable with each other. We're playing our part, actively licensing music to meet your needs for flexibility and portability - they now need to act.

Well, you being the people creating the music could have some saying power in what's implimented. Could that flexability come with a LAME VBR version for the rest of us on DSL, or a FLAC version for the person willing to pay for the extra bandwidth?
From question 5:
Steve Knott, HMV:

Quote: I'm not sure that's entirely the case, Andrew, and please remember that a lot of illegal content found on file-sharing networks may feature inferior audio or contain viruses. Either way, I still think that it's right for content owners to protect copyright and manage the distribution of any revenues owed via DRM.
I agree that it may not always be perfect, and can understand frustrations among 'legitimate, legal, paying customers', but there is a need to have a system in place to manage this whole process.

I can agree with that at least. It's not the best quality, but at least you know it's fully-functional and is free of anything else. Although, that's why BitTorrent has hash-checking, so you know that at least it doesn't have any viruses or anything.
Q 6:
Brad Duea, Napster:

Quote: Simon, given your concern, you should never have been using the iPod or iTunes. Apple appears to want to sell and resell you hardware and music, over and over again. Also, when compared to subscribing to music, buying music in any format does not make much sense, particularly when history shows us the pain folks have endured from the format sales scam by having to buy the same album on eight-track, vinyl, cassette, CD and now digital.

This is like a total bash on iPod, and he has every right to do so. If something is not compatible with a future advancement, people will get sick and tired of having to continually update, like he said. I think Apple needs to fully stop what it's doing and allow more flexability in their products.
From Q7, Peter Jamieson, BPI said: (exerpt)

Quote:Music doesn't come for free...

I can only wonder how he was able to say such a bold statement. It may not be free in the his eyes, but music is supposed to be generally free for all people to listen to. In fact, people sharing downloads will in effect bring that artist even more fans, because the people got a chance to sample their music for free, like what MP3Lizard.com does. How can he honestly say that without some indignation that not all artists make music for money.
I'm not even getting started on question 8. Anyone who says they never transfered something from one device to another with the technology in hand is a complete liar. Apples and oranges are still fruits in that respect, you can't deny that in one form or another you haven't had the opportunity to do so.
These companies need to accept the facts that if someone finds something that is 100% convinient to them, they're less than likely to switch to something that comes as inconvinient to them. Just once and for all give the customer what they want instead of what you think they want. You are not them, and will never be them, so stop trying to be them.

Quote:I think Apple needs to fully stop what it's doing and allow more flexability in their products.

Apple already lets people listen to there music on up to 5 machines (counting iPods) and lets all 5 machines burn CDs that do not contain DRM. How can Apple be more flexible? You could say that Apple could open up their DRM so that more players could be supported, but why should Apple suffer because their business model is solid.
People with iPods buy from iTunes (a free application). I'm sure Steve would support an industry standard if it was better than their iPod plus iTunes scheme. But what could make them more money than what they are currently doing. Nothing. Apple's success comes from the fact that their system is easy. Everyone with an iPod know where to go. They can rip there (non-DRMed) CDs in MP4, Mp3, Apple-Lossless or WAVE form and take it where ever they go.
Now if the iPod didn't support mp3 or WAVE files then I would be pissed and wouldn't own an iPod. But it does so I do and I've never looked back.
I will also say this, the music you by with iTunes is yours without any monthly fees or other BS. The only thing I don't like is the inability to use my favorite media player on my licensed machine to play my purchased music. Thats the only thing I dislike. I also agree that would be nice to choose the bitrate or possibly a lossless version so that you get a music experience closer to that of the original CD.
I would also love to purchase suround sound music but it looks like that ship has sailed. How could the music industry not use the new digital music services to push surround sound music? That's something that puzzles my to this day.
Sorry for all the ranting,
Ced

This message has been edited since its posting. Latest edit was made on 25 Jan 2006 @ 20:29

I can agree with that. iPod is pretty flexible, but only with it's own business model. They're so hyper-competitive about out-doing everybody else, that they don't allow any other combo to work (prove me wrong if this isn't the case).
Yes, I do feel bad that artists and their proprietors are being ripped off, but if it were up to me, I wouldn't allow an artist to be rushed just to get a product out before the next guy. It just sullies the whole experience, and it shows in the final product.
These companies don't take the time to actually consider what the artist and the comsumer want.
And by "stopping what Apple's doing," I meant that they should allow more formats than Quicktime to be used on their iPod Video, etc. It's like the difference between open-source and closed-source, open-source usually has the customer in mind, and not just in its investment.

They must still be referring to the fact that not everyone (intelligent) is going for the higher-quality stuff, and that they still are going to supply different versions at different bitrates for each.
But, again, it doesn't cost anything to set up LAME, due to it being free for encoding, or FLAC, since it's freely liscensed. These companies are still stuck on this close-minded spectrum that if a product needs to be paid for, it's the better choice.

Hello AD readers,
I thought that some of you may be interested in hearing the no-spin answers to the above 8 questions before the healthy dose of political correctness was applied to them. These answers were provided to us courtesy of my old friend Honest Abe who has a part-time job as a fly-on-the-wall and can smell do-do from as far as 20 miles away.
The real answers are as follows:
Answer to question 1> "No, because we're greedy bastards."
Answer to question 2> "Yes, because we're greedy bastards."
Answer to question 3> "Because it lowers the overhead for us greedy bastards."
Answer to question 4> "That's the idea, we're greedy bastards."
Answer to question 5> "To take money from the consumers, while at the same time providing virtually nothing of any value ensures our status as greedy bastards."
Answer to question 6> "We don't care, we're greedy bastards."
Answer to question 7> "Who cares? They're all a bunch of file-sharers, and thus, are depriving us of the opportunity to remain filthy-rich greedy bastards."
Answer to question 8> "Yes, we accomplish this on the front-end by slicking the artists out of the music rights for literally a song. Now, does that really make us greedy bastards?"
Only the greediest.

Quote:Disclaimer:
The views expressed above are the views of the person making this post and in no way reflect the view of AfterDawn or any of their affiliates. This style of writing is known as parody, and as such, is not subject to legal action by greedy bastards.
-Rock On!

[blockquote]Mik3h (Senior Member) 25 January 2006 12:42
Well.. it's not better to downlaod than upload.. but true you have a better chance of not getting caught, and a better chance of not getting in as much trouble if you do.. [/blockquote]not accurate in the US or the UK. it is not a question of "chance" of getting caught or amount of "trouble."
There is simply is no mechanism/penalty or any case law of people getting "caught" at all for downloading or getting in any "trouble."

When people are downloading they download from a source, or multiple sources.
Say you download a track on LimeWire PRO, say one of the sources is the RIAA, and the song you get is corrupted, but the RIAA now have your IP as evidence, and you can be sued for - the intent of stealing music, as you haven't paid the records or the artist the money for it.
-Mike

My generation has been copying music off AM radio since the early sixties when the Japanese flooded the market with cheap transitor radios and tape recorders. The quality was horrible but so was AM radio. They're worried now so much because now the quality is perfect 100% reproduction that does not degrade with each reprodiction. It was their idea to go to CDs instead of vinyl with is still a good product. It was gonna save us sooo much money. Well it has in a way. BUT not the way they were counting on.

I think that the biggest mistake that the music industry continues to make is that they started taking the music part of the business for granted. They seemed to put less importance on looking for talented artists as if all they had to do was show up for work and let the talent come to them. Then when some of the artists did come to them, it seems as though the record labels got caught-up in the industry aspect by playing corporate chess, with the artists being used as the pawns. Of course, the Britneys and the Mariahs still recieved the royal treatment, but the other 90-something percent were often times treated as a potential threat, the size of which depended on the percieved amount of potential talent the artist possessed. Often times the talent was judged to be not worth the expense of publishing more than a couple of demo's, so the artist would sell their publishing rights to the record labels, fully believing that they were going to get their shot, when the labels were really just interested in burying the intellectual property in their back yard so no other labels could use this talent against them. Checkmate is too much work so stalemate appears to be the way to go. Unfortunately, that's exactly what the music industry has become. Stale. This is one of the main reasons, IMO, that the Indie labels have become so prevalent these days.
I'm sure that there are quite a number of things that may factor in to this behavior that I wouldn't begin to understand, as I have never had the opportunity to see things from inside the biz. What I do know is that I have to look harder than ever to find some decent tunes on which to spend money I am desperately trying to give them as revenue. With the number of people on this planet constantly increasing, you've got to think that the next Tupac or Nirvana or Toby Keith are all out there somewhere right now.(Sorry Toby, this is meant to be a compliment. In no way am I suggesting that you crash the poker game that is going on between Kurt and Tupac in some parallel universe right now.)
With a lot less attention on the industry and a lot more focus on the music, hopefully, we can be listening to something a little less stale than The Spice Girls.

Freshguy, the perfect comment.
Royalties are a myth. They barely exist. Only 5% of artists ever get a check. Most just get bills after all the deductions for manufacturing and distribution costs are factored in. The Industry's real problem is that the real cost may become transparent.

ImpeachPAC Forms Citizens Impeachment Commission
Submitted by bob fertik on Mon, 2006-01-02 12:19. About ImpeachPAC
ImpeachPAC today announced the formation of a Citizens Impeachment Commission to make 2006 the "Year of Impeachment."
"We are honored by the broad support for impeachment from this distinguished group of true American patriots," said Bob Fertik, President of ImpeachPAC. "Impeachment is not a 'fringe' position, as the Bush Administration would like Americans to believe. With a recent Zogby poll showing Americans support impeachment hearings by a solid majority of 53%-42%, there is far more support for impeachment than there is for the War in Iraq," Fertik said.
www.impeachpac.org